The Economic Survey 2025–26 arrives at a time when the global climate discourse is moving beyond ambition to questions of resilience, sequencing and institutional capacity. It clearly recognises India’s aspiration to become a developed nation by 2047 and underscores that this journey must be anchored in high, inclusive and environmentally sustainable growth.
What stands out is its candid reminder that India’s progress will depend on how effectively it balances economic expansion with a climate transition that does not destabilise the very systems it seeks to strengthen. The Survey frames India’s climate strategy around three core pillars: mitigation, climate finance and adaptation, supported by regulatory depth and institutional reform.
In simple terms, India is trying to grow fast, grow clean and grow fairly, even as international climate finance and regulatory frameworks increasingly emerge as binding constraints. With 83 per cent of mitigation and 98 per cent of adaptation financed domestically, the message is clear: global climate finance must step up meaningfully.
Climate Mitigation
The Survey adopts a pragmatic view of mitigation, emphasising diversification rather than substitution. India’s energy transition is not framed as a rushed departure from conventional sources but as a calibrated expansion of renewables alongside scalable energy efficiency, nuclear energy, bioenergy, storage systems, green hydrogen and strategic mineral partnerships. This approach reflects a recognition that decarbonisation and energy security must advance together. Capacity additions alone cannot guarantee resilience. Grid stability, transmission networks, storage technologies and dependable baseload power remain indispensable.
India’s progress is notable, with over half of its installed power capacity now coming from non-fossil fuel sources as of late 2025. Yet the Survey avoids complacency. It identifies storage limitations and material availability as emerging bottlenecks and points to the growing geopolitical importance of critical minerals such as lithium, cobalt, nickel, copper and rare earth elements. India’s National Critical Mineral Mission and overseas partnerships reflect strategic foresight that supply chain security will define the pace of the global energy transition.
The Survey also underscores the importance of market mechanisms in accelerating mitigation. The Carbon Credit Trading Scheme represents a shift from design to implementation, linking the Perform, Achieve and Trade framework to tradable carbon credits. The next phase must ensure that carbon markets deliver measurable outcomes, including the integration of Carbon Capture, Utilisation and Storage into approved offset mechanisms, giving hard-to-abate sectors a credible transition pathway. Energy efficiency, as the most cost-effective mitigation lever, must move rapidly from policy intent to large-scale adoption.
Climate Finance
Finance remains the most binding constraint in India’s climate journey. The Survey is explicit in its assessment that, despite abundant global liquidity, developing economies continue to face a severe financing gap estimated at USD 4 trillion annually. India continues to shoulder the bulk of its climate investments domestically, underlining the urgent need for international finance to become more accessible, predictable and equitable.
Encouragingly, India’s domestic financial architecture for climate action is strengthening. Sovereign green bonds worth Rs 15,000 crore were issued in FY26, taking total issuances since FY23 to Rs 72,697 crore. Municipal green bonds are expected to play an increasingly important role, with the potential to unlock USD 2.5 to 6.9 billion for city-level climate initiatives. These developments reflect a maturing market where credibility, transparency and reporting standards matter more than signalling intent.
Development finance institutions and sector-specific lenders are playing a catalytic role in project preparation and de-risking. Regulatory reforms, including sustainability disclosures and green bond frameworks, have improved investor confidence. At the same time, the Survey offers a pointed critique of multilateral development banks, noting that their risk-averse models limit capital mobilisation. A shift towards blended finance, guarantees and insurance-based instruments will be essential to crowd in private investment at scale.
Climate Adaptation
Adaptation is where the Survey’s realism is most evident. India’s climate strategy has consistently embedded adaptation within broader development spending rather than isolating it as a standalone agenda. Public expenditure on resilience has risen steadily, reflecting the integration of climate considerations into agriculture, water management, urban development and infrastructure planning.
The National Action Plan on Climate Change continues to provide institutional continuity through mission-driven interventions, while State Action Plans enable context-specific responses aligned with local ecological realities. As urbanisation accelerates, the Survey highlights the importance of embedding climate risk into land use planning, infrastructure standards and service delivery. In this framework, resilience becomes less about environmental policy alone and more about governance quality and institutional preparedness.
The Survey also reiterates a critical insight: for climate-vulnerable economies, development itself is a form of adaptation. Expanding access to reliable energy, strengthening infrastructure and improving livelihoods enhance societal resilience to climate shocks. This perspective reinforces that climate action must remain closely aligned with human welfare and economic stability.
Taken together, the Economic Survey signals a recalibration rather than a retreat. India is not stepping back from climate ambition; it is grounding it in institutional capacity, energy realism and financial pragmatism. In a world increasingly defined by energy shocks, fiscal constraints and climate volatility, resilience is emerging as the true measure of leadership. India’s pathway may not be linear, but by embedding mitigation, finance and adaptation within a broader development framework, it offers a model that prioritises durability over rhetoric. In the long run, systems that endure will matter far more than promises that prove difficult to sustain.
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